North Sydney – Do I Stay or Do I Go?

Thursday 15 June 2017

The end of FY16-17 is approaching, and while the National Sydney market remains one of the strongest across Australia, there has been a clear reduction in transaction volumes. This is a trend that often causes tension between the North Sydney CBD and neighbouring Sydney CBD, as investors seek opportunities in markets that traditionally are difficult to break into. We all hear about the ongoing renovations to the Sydney CBD, in terms of Barangaroo and the new Light Rail, but what most investors aren’t aware of, is the multi-billion dollar injection of infrastructure improvements to the North Sydney CBD and nearby Metropolitan areas.

 

Infrastructure Improvements:

West Connex

  • Estimated cost of $16.8 billion.
  • Estimated completion in 2023.
  • Will provide a western bypass of the Sydney central business district (CBD); provide connections to the Western Harbour Tunnel and Beaches Link and provide a connection to Sydney Airport and Port Botany via Sydney Gateway.

 Sydney Metro

  • Estimated cost of $12 billion.
  • Estimated completion in 2024.
  • Will connect Bankstown to Chatswood through Parramatta, Sydney CBD, North Sydney and St Leonards etc. An extension from Chatswood up to northwest will connect Macquarie Park, Epping, Castle Hill, Kellyville and Rouse Hill etc.

North Sydney Station

  • Estimated completion in 2019.
  • Will connect the high population growth areas of the northwest of Sydney with the existing North Shore rail line.

The widespread withdrawal of secondary stock to make way for a pipeline of new development has seen commercial, retail and residential values soar in the North Sydney CBD. Consequently, Metropolitan areas that are being tightly connected to this market through the introduction of new transport and infrastructure lines have also seen a substantial increase in values. These include areas such as Macquarie Park, North Ryde, Parramatta and Blacktown. 

 

Market Improvements:

North Sydney CBD

  • Approximately 127,139 sq.m of approved commercial developments, including 177-199 Pacific Highway, which has been completed in Q4 2016, offering NLA of 39,419 sq.m.

Investors can expect to see the introduction of approximately 46,540 sqm of new stock in the North Sydney CBD by the end of FY16/17. Despite this, effective rents are anticipated to remain high with the potential of increasing by 24-31% by the end of 2017, mainly due to the mass demand for prime space as evidenced in recent pre-commitments and the heightened infrastructure activity currently underway in this market.

 

What to do?

It is clear that North Sydney is a hot market at the moment, and we don’t see any signs of this slowing down, particularly as its physical connection to growing metropolitan markets strengthens.

If you are looking for the next big move for your investment either pre or post FY16-17 or would like further assistance understanding the substantial improvements set for Sydney’s North Shore and greater Metropolitan areas, contact our North Shore Sales team on 02 9925 0000